Airbus Sees Opportunity In Lakota Sales

One year ago, what was then EADS North America was on the ropes. After scaling back its ambitions to expand, even its go-to Army programs were in trouble as the service reduced its UH-72 Lakota helicopter purchase and scrapped the Armed Aerial Scout program for which the company was positioned to compete.

But now the company—rebranded as its former subsidiary Airbus Group—is buoyed by new Army plans to buy 100 of the two-engine light utility helicopters as trainers at Fort Rucker, Ala., where aviators in the U.S. Army and foreign militaries learn to fly.

The Army’s decision, part of a larger and still-controversial plan to restructure its aviation programs, has money behind it. President Barack Obama requested funding for 55 aircraft in fiscal 2015, and a defense authorization bill pending before the Senate would add to that amount, providing $612.6 million toward the purchase of 90 Lakotas. If approved, company officials say, the buy could help position Airbus to replace 10% of what they estimate is is a total of 5,000 Bell UH-1 Hueys and other Huey types worldwide.

“I would think we would get a lot more than that,” says Allan McArtor, chairman and CEO of Airbus Group, encouraged by the bit of news he had gleaned from Marc Paganini, president of Airbus Helicopters, during a recent visit to the facility here where the company has already assembled 300 Lakotas and also builds AS350 Ecureil/Astar commercial helicopters.

The Army’s decision establishes the aircraft as the first that will be touched by a new generation of aviators, and program officials echo McArtor’s enthusiasm. “Every foreign military student who comes to the U.S. will learn to fly in the Lakota,” says Army Lt. Col. Dave Cheney, Lakota helicopters product manager. “And we can probably expect more interest.”

The Royal Thai Armed Forces was the first to purchase the Lakota through a U.S.-backed Foreign Military Sale (FMS). Thailand has purchased six, four of which are already in production here, and the country has expressed interest in more.

The rebound of the Lakota began when the Army’s fiscal 2014 budget cut the planned purchase of the helicopter for that year as well as future years, and when the fate of the Armed Aerial Scout program was in doubt.

Guy Hicks, who leads Airbus North America’s Washington operations and cut his teeth working for the House Appropriations Committee, set about restoring funding. He calls the effort “basic blocking and tackling.” The company started with the House and Senate Armed Services Committees and harnessed the influence of the National Guard in eight states who fought hard to ensure they received their complement of Lakotas.

“The biggest arrow in the quiver was the fact that it was the Army’s best aviation program. The Army even said so,” Hicks says. “It’s the right program in a declining budget environment.”

That lobbying push helped to restore funding from Congress for fiscal 2014. But company officials say they found out about the Army’s decision to make the Lakota its next training helicopter not long before the Army announced its larger plan to restructure aviation.

“This was not something where there was a direct effort to lobby the Army to say this is what you should do,” Hicks adds.

Army officials note that consolidating Lakotas at one base made financial sense in a tight market, saying they are gaining efficiencies by replacing the TH-67 training helicopter.

Will the continued sale of Lakotas—to the Army and through FMS—be enough to keep Airbus Group’s U.S. defense ambitions alive? The company has dramatically scaled back its sights in recent years. In 2011 after then-EADS North America lost the U.S. Air Force tanker competition to Boeing, CEO Sean O’Keefe set a stretch goal of $10 billion in U.S. revenue over a decade. The company, bruised by the competition in which Boeing and its supporters employed a “more-American-than-thou” strategy, has since struggled to gain a foothold beyond the Lakota with the U.S. military. The Army’s decision to abandon the Armed Aerial Scout mission also hurt; Airbus had spent more than $100 million developing three versions of the UH-72A for the competition (AW&ST Jan. 20, p. 22).

Two years ago, Airbus attempted to balance its ratio of commercial and defense business, which continues to be about 80% commercial, through the acquisition of BAE Systems. Although the merger was blocked, the exercise allowed Airbus to restructure its shareholder agreements and limit the amount of control European countries had, which McArtor indicates could help Airbus shed its European image.

The focus for Airbus Group now is trying to grow “more organically,” McArtor says. While acquisitions are not Airbus’s top priority, the company is on the lookout for possibilities. McArtor cites cyber security and space. He adds that Airbus might even aim to replace the U.S.-made C-130J airlifter with the A400M.

Ten years ago, McArtor—a former FAA Administrator and fighter pilot—recalls, the facility in Columbus did not exist. “You can be competitive in the U.S. military market, if given a chance to compete.”